Our last two updates on Cresco Labs Inc (OTCMKTS: CRLBF) acknowledged the robustness of the stock amid positive market sentiment. In particular, the stock has been on a roll since January and it promises to give even more gains to investors.
Cresco Labs Share Price Analysis
The stock opened the year at $6.73 and went on to achieve this year’s high at $13.21 on April 24, 2019. However, the stock breached the 50-day moving average trend-line at $11.78 on May 22 but later bottomed out at $10.77.
Looking at the performance of the stock year-to-date, there is immense potential in terms of returns. To be sure, the stock is up 70.58% year-to-date and the desire to add more value is demonstrable. In particular, the current bull market has been buoyed by a spike in sales which was noted when the company released its earnings report for Q1 2019.
In the quarter, Cresco Labs generated $21.1 million in revenues which implies a rise of 311% year-on-year. In Q4 2018, the company reported a rise in revenue in the region of 411% YoY. Basically, this is an indication of the strong sales momentum which is supported by a robust business model and a general bull market in the cannabis industry.
Nonetheless, Cresco Labs missed consensus estimates for Q1 revenues. In particular, Thomson Reuters polled analysts before the earnings report and the estimated revenue for Q1 2019 which emerged from the consensus was $22.6 million. Also, the earnings underperformed estimates when it comes to anticipated loss. While the reported loss for the quarter amounted to $7.6 million, the estimated loss was $4.2 million.
Like earlier noted, the Cresco stock has grown 70.58% so far this year. Comparably, the Horizons Marijuana Lifesciences ETF has grown 42.6%. As such, Cresco has outperformed key market indicators and still looks poised to stretch the lead.
About Cresco Labs
Cresco prides itself in having an experienced management team which is capable of executing its growth strategy. The company grows, processes and retails premium cannabis and with a multistate business presence. Particularly, the company identifies and enters markets which have a lot of demand potential. Also, it boasts a remarkable speed-to-market which enables Cresco to replicate the model and grow its national reach expeditiously.
Voluntary lock-up agreement
In a demonstration of shareholder confidence in Cresco’s long term growth strategy, holders of a little over 205 million common shares agreed not to sell their shares until December 3, 2019 and June 3, 2020. According to Charlie Bachtell, Co-founder and CEO of Cresco, the voluntary lock is the purest demonstration of shareholder confidence in management. This confidence should inspire the management to deliver greater value to shareholders and to execute the company strategy more efficiently.
“Our ability to deliver on the vision we have for building Cresco into one of the most important company’s in the U.S. cannabis industry has instilled a high level of trust among our investors that we can continue executing on plan, responsibly manage the increase of the Company’s liquidity and continue to preserve and create long-term shareholder value,” Bachtell explained.
The Social Equity & Educational Development (SEED) program
At the core of Cresco’s business strategy is to touch the community in a way that makes its continued growth much more meaningful. To this end, the company announced the unveiling of a community-oriented program dubbed Social Equity & Educational Development (SEED).
Particularly, the vision for the SEED program is built around the belief that the cannabis industry is a potential job-creating industry and that it could help many people lead meaningful lives in the future. Therefore, the principal outcome of the program is to prepare the members of the society for this massive industry in terms of skill, knowledge, and mindset which befits the industry.
For starters, the SEED program is three-pronged where the targeted areas are Social equity, a business incubator program, and workforce development through education initiatives. Towards social equity, Cresco Labs has several initiatives which are already underway in about three states. Also, the company has developed a model which will guide the business incubator program to provide the necessary support for individuals who would like to enter the cannabis industry. Lastly, the workforce development initiative will incorporate the provision of internship opportunities, placement assistance, and job training. This initiative will be undertaken in collaboration with colleges and universities.
In light of the developments herein discussed, we still believe the Cresco stock is poised to make a bull run in the near term. Also, despite the recent miss in revenue estimates, the company’s financials are still robust enough to support an upside price action going forward.
Additionally, the SEED program should further generate positive market sentiment, especially when thinking about the long term strategy for the company. Basically, Cresco is strong both in the near and the long term. This is a buying opportunity which investors should not miss!
We will be updating our subscribers as soon as we know more. For the latest updates on CRLBF, sign up below!
Disclosure: We have no position in CRLBF and have not been compensated for this article.